Meta's Metaverse Misstep Sends Shares Plunging as Spending Surges

In the months leading up to November 10, 2025, Meta Platforms (formerly Facebook) has faced significant investor backlash over its aggressive spending on metaverse initiatives. After the company reported its Q3 2022 earnings on October 29, 2022, its shares plummeted by 17%, as investors grew increasingly concerned about Meta's financial profile.

The primary driver behind this sell-off was Meta's surging spending across various functions, including selling, general, and administrative (SG&A) expenses, as well as research and development. As Meta's operating expenses ballooned, its free cash flow deteriorated, causing investors to question the company's direction.

However, Meta's focus has now shifted away from the metaverse and towards artificial intelligence (AI). During the company's Q3 2022 earnings call, CEO Mark Zuckerberg spent considerable time detailing Meta's AI roadmap, including new products, services, and how these projects are directly impacting consumer engagement and sales. To support these AI initiatives, Meta has been rapidly increasing its capital expenditures, with much of the spending going towards infrastructure and talent acquisition.

The company's pivot to AI comes as its metaverse ambitions have failed to bear fruit, leading to a more than 60% decline in Meta's share price by the end of 2022. This shift in strategy could potentially benefit competitors like Nvidia, which has been a key player in the AI ecosystem.